HCMC office building market sees partial recovery

Grade A office rents in Ho Chi Minh City continued to slip in the third quarter but that of grades B and C increased for the first time since the end of 2009, real-estate consultancy CB Richard Ellis reported.

While average rent for grade A offices fell to US$36.70 per square meter per month from $37.51 in the second quarter, it rose from $19.3 to $20 for grade B offices.

The total area leased in the 3rd quarter was 62,000 sq. m, taking the total for the year to 194,000 sq. m, or higher than in the whole of 2009 when the number was around 154,500 sq. m.

HCMC’s economic recovery, which remains on track, is persuading companies to move to large office buildings.

Banks, schools, and service providers are among the main customers for grades B or C in the downtown area.

Although eight new grade C and one grade B buildings opened in the 3rd quarter with more than 63,000 sq. m of space, the rate is still climbing. On the other hand, no new grade A building came into the market but the rental is still falling.

Another reason for the declining demand and rent for grade A offices is the competition from some tenants who buy space in the buildings at preferential prices and lease it out at 15-35 percent lower than the building owners.

Though the economic recovery will mean higher demand for office space in the coming future, rates will decrease as a result of huge supply coming into the market.

In the final quarter of this year alone, 100,000 sq. m will be available, including at the Bitexco Financial Tower which will have 37,000 sq. m of grade A space.

In the next three years, 1.2 million sq. m of new office space for lease will be available.

Old buildings will face tough competition and, though many are planning to upgrade, will find it hard to maintain current rentals.

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Office rent continues downward trend

HCMC – The average office rent in HCMC continued its downtrend as supply increased further in the third quarter of this year, posing more pressure on rent and occupancy benefiting tenants, according to Savills Vietnam.

The market research company released its quarterly report last Thursday, noting that office rent dropped some 3% compared to the previous quarter since property owners were anxious about the risk of oversupply.

The market witnessed asking rents in Grade A office segment dropped 3% to US$57, Grade B was down 2% to US$33 and Grade C also fell 2% to US$22 per square meter per month. However, average occupancy remained stable at 85% thanks to the arrival of new tenants and a shift from private houses to professionally-managed buildings.

Tran Nhu Trung, associate director of research and consulting for Savills Vietnam, said oversupply and competition would continue to drag down rents and occupancy across all the three grades. The competitive rental market, however, will give more chances to tenants in selecting quality serviced buildings.

Savills, however, projected that demand for office space, in the mid and long-term, would continue to increase given the expected high growth of the city’s economy. Grade A office buildings are waiting for a new wave of foreign direct investment inflow, while Grade B and Grade C buildings depend much on the health of domestic investment.

The city’s office market has 154 office buildings at all grades, offering nearly a million square meters of office spaces, with Grade B office more dominant with a 50% market share.

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Bitexco hires French firm for skyscraper launching

HCMC - Local property developer Bitexco Group on Monday announced the appointment of a French event management company to prepare for a surprise launch of its iconic skyscraper in downtown HCMC late next month.

Prisme International will color the skyscraper with fireworks and lighting effects at the launching ceremony for the Bitexco Financial Tower. It is the company that organized the launching of the world’s tallest structure Burj Khalifa in the United Arab Emirates city of Dubai.

Pierre Marcout, chairman of Prisme International, told a press briefing held at the five-star hotel Sheraton Saigon in the city’s commercial district on Monday that the company would not only perform the event for VIP persons, but also for everyone in the city.

Marcout, however, declined to reveal details of the event but talked briefly about fireworks and lighting displays at the ceremony.

The project developer said the event was aimed at impressing local and foreign visitors on the city’s tallest building, but how much the company would spend on the much-awaited inauguration remains unknown.

Bitexco also announced on Monday that the workplace solution provider Regus would become a tenant at the building. Regus will lease some 1,000 square meters of office space on the 16th floor of the lotus-shaped tower, becoming the biggest tenant at the moment.

When in service next month, the 68-story building will offer around 37,000 square meters of Grade A office space and 8,000 square meters of retail podium.

Peter E. Dinning, general director of Colliers International, a marketing and management agent for the office section of the building, told the Daily at the news briefing that leasing commitments accounted for about 24% of the building’s space. With a list of potential tenants Colliers is working with, the office section is expected to be full in the coming time.

Dinning said many companies previously scaled back business operations but they were starting expansion, prompting an increase in office demand. Regus is an example; it is not moving from another building but it is expanding business.

He projected a more stable market trend, saying the local office market will neither go up nor go down abruptly.

Market observers said they expected rent to remain low due to large areas of new office stock entering the market, and that landlords were still offering incentives to attract tenants.

Brett Ashton, managing director of Savills Vietnam, said in a quick review on the market that the HCMC office market is facing an oversupply which can send rent down further over the next six months.

An additional 153,000 square meters of office will be on the market this year, thus worsening the oversupply situation, said Ashton.

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Office and villa projects half-done

Sacomreal’s office building under construction on Pho Duc Chinh Street in HCMC - Photo: Hong Duyen

HCMC - Two property developers have announced the completion of the first phase of an office building project in HCMC and a villa project in the central coast city of Danang.

VinaLiving, a housing brand of VinaCapital Real Estate, says it has finished phase one of the Ocean Villas at Danang Beach Resort, and handed over the first 30 villas to owners.

The Ocean Villas comprises a beachfront residential component with 115 luxury beach villas as part of VinaCapital’s 260-hectare complex near the newly opened The Dunes Golf Course.

The developer says almost 80% of the phase-one villas were booked by buyers shortly after the two soft launch events held last year – one in Hanoi and one in HCMC.

In another project, Saigon Thuong Tin Real Estate JSC (Sacomreal) and its partner Ganeralimex Company last week held a topping-out ceremony for their  office building on Pho Duc Chinh Street in downtown HCMC.

The VND73 billion project is being developed on a 3,850-square-meter site with 10 floors for offices. It is scheduled for completion late this year.

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Office and villa projects half-done

Sacomreal’s office building under construction on Pho Duc Chinh Street in HCMC - Photo: Hong Duyen

HCMC - Two property developers have announced the completion of the first phase of an office building project in HCMC and a villa project in the central coast city of Danang.

VinaLiving, a housing brand of VinaCapital Real Estate, says it has finished phase one of the Ocean Villas at Danang Beach Resort, and handed over the first 30 villas to owners.

The Ocean Villas comprises a beachfront residential component with 115 luxury beach villas as part of VinaCapital’s 260-hectare complex near the newly opened The Dunes Golf Course.

The developer says almost 80% of the phase-one villas were booked by buyers shortly after the two soft launch events held last year – one in Hanoi and one in HCMC.

In another project, Saigon Thuong Tin Real Estate JSC (Sacomreal) and its partner Ganeralimex Company last week held a topping-out ceremony for their  office building on Pho Duc Chinh Street in downtown HCMC.

The VND73 billion project is being developed on a 3,850-square-meter site with 10 floors for offices. It is scheduled for completion late this year.

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